Repsol has obtained a net income for 1996 of 119,222 million pesetas, showing a rise of 1.3% over the 117,715 million pesetas registered last year. Last year�s operating income was 198,610 million pesetas in comparison to 212,504 million pesetas in 1995.

This improvement has been reached in spite of the strong fall in international chemical margins, a commercial war in United Kingdom petrol markets, freezing of prices and margins of Repsol Butano and the 56% increase in investments over 1995.

In accordance with Royal Decree-Law 7/1996 of June 7th, Repsol has proceeded to revalue its fixed assets. This has represented an increase of almost 120 billion pesetas in stockholders� equity.

The most relevant data from Repsol�s 1996 results for each area of activity are as follows:

Operating income for exploration and production rose by 66.2% to 31,579 million pesetas. These figures were boosted, principally, by the favourable evolution of crude oil prices over the period - Brent crude oil rose to an average price of 20.46 dollars per barrel from the 17.05 dollars per barrel registered in 1995 - , and the start-up of the Harding field in the United Kingdom as well as the East Delta field in Egypt. Another positive factor was the results of the Argentine company Astra, in which Repsol owns, directly or indirectly, 47.5% of the shares.

In refining and marketing, the operating income was 81.319 million pesetas, up 7% over 1995. These results were due to the clear improvement of the international refining margins during the year, which increased by 30%, as well as the positive contribution of the refining and marketing activities of Astra and La Pampilla and Corpetrol in Peru.

The marketing activity has been significantly affected by various factors. In addition to the contraction of margins due to the price war in the United Kingdom, also to be included are the negative effects caused by the disappearance - in the formula that establishes the maximum gasoline prices in Spain - of data corresponding to 97 leaded gasoline in Holland and Germany, since the months of September and October, respectively. Additionally, it should be pointed out that Repsol initiated in the month of September a new commercial policy to promote the consumption of unleaded 95 RON gasoline and to increase its market share by making higher discounts in its prices than in the other gasolines. Also to be mentioned are the negative effects caused by the 70 days of strike carried out by the workers at the Petronor refinery.

Chemicals registered an operating income of 24,069 million pesetas, much lower than that obtained in 1995 which was, without a doubt, an exceptional year. Although main plastic margins, as a whole, have been lower than those of 1995, during the second half of the year, they were higher than those of the first semester of 1996.

In the gas area, the operating income amounted to 62,629 million pesetas, which was 8.8% above that obtained last year. These results are very positive, especially taking into account that during the fourth quarter, the margins of LPG (butane and propane) fell due to the impossibility of transferring to the public sales price (due to the lack of an official modification of maximum prices) important increases in the cost of raw material.

The negative financial results fell by 52% as a consequence, basically of the lesser goodwill amortization in 1996, having already anticipated various contingencies in 1995, as well as the decrease in financial expenses.

The investments made by Repsol during 1996 added up to approximately 316,550 million pesetas, a figure which exceeds that of 203,228 million pesetas invested in 1995. Of special interest among these investments are those destined to acquisitions in Latin America (approximately 90,000 million pesetas) and those made by Gas Natural (more than 60,000 million pesetas), the majority of which have been dedicated to the acquisition of Sagane. This elevated level of investments has been one of the main reasons for the high debt level of the company which, at the end of 1996, registered a net debt of 381,545 million pesetas.

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$= 129.89 pesetas in 1996

$= 121.71pesetas in 1995

* Includes financial results, goodwill amortization and equity on earnings of unconsolidated affiliates